If a patent can’t cover an “abstract idea,” can it be a trade secret?

Should I patent my invention or keep it a trade secret? Inventors often ask me this question. And after a recent court decision and USPTO actions that raise the bar for patenting software inventions, the question is becoming even more important for software developers who want to protect their IP.

In Alice Corporation Pty Ltd. v. CLS Bank Int’l, the Supreme Court made it clear that “abstract ideas” are not eligible subject matter for patent protection. The decision, as well USPTO Preliminary Examination Instructions that followed the decision, suggest that inventive concepts such as algorithms, financial business methods and methods of organizing human activity are not, in themselves, patentable unless claimed with additional elements that make the claim cover significantly more than just the abstract idea.

So, does this mean that it’s better to keep certain inventions as a trade secret? Will trade secret law protect abstract ideas in a way that patent law can’t?

In most cases, probably not. Several state court decisions suggest that a trade secret needs to be described in an enabling manner in order for the owner to enforce trade secret rights against others.

For example,the Court of Appeal for the State of California recently held that in California, a “trade secrets plaintiff must, prior to commencing discovery, ‘identify the trade secret with reasonable particularity.’” New Castle Beverage, Inc. v. Spicy Beer Mix, Inc., (Cal. App. 6/17/2014). In that case, the complaint described the trade secret as a “process of applying a secret solution to the inner and outer surfaces adjacent the lip of a beverage cup to permit a first mixture of spices to adhere to those surfaces.” The court found this description to be too vague. Also, the lower (trial) court expressed a concern that if it were to grant a preliminary injunction, the court would have difficulty determining whether the defendant was violating the injunction.

This means that when deciding whether to patent a process or keep it trade secret, the inventor should work with his or her attorney to assess which area of law provides the best protection, not which regime is easier to use. In both situations, the inventor should identify and document a complete description of the process. This description needs to include more than just the general idea itself, it needs to explain how the idea is implemented as technology.

So, if the question is “can I protect it,” patent law and trade secret law will often lead to similar answers. Neither area of law is likely to help an inventor who either can’t or won’t fully describe the process in a way that enables a reader to make and use the process, and that allows a court to determine when an infringer is using the process.

One response to “If a patent can’t cover an “abstract idea,” can it be a trade secret?”

Despite the fact that both the patent and trade secrets should be described clearly if it has to be helped out by any law in case of infringement issues pop-up, another advantage of having the invention as a trade secret is that it does not bound to the 20 years validity like patents. A perfect example could be the famous “Coca-Cola’s” secret formula.

About IP Spotlight

IP Spotlight provides news and practice tips relating to the legal and business aspects of intellectual property and other intangible assets. Topics include licensing, due diligence, acquisition, compliance and risk management associated with patents, trademarks, copyrights and trade secrets. IP Spotlight is published by Jim Singer of Fox Rothschild LLP.

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Jim Singer is a partner with the law firm of Fox Rothschild LLP, where he focuses on intellectual property acquisition, protection, enforcement and licensing. For more details and contact information, select the "About the Author" link below.

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